A massive tyre dump in Victoria’s west is at the centre of talks between the government and a recycling company as authorities prepare to crack down on the hazardous waste.

Motorway Tyres went bust in 2008, leaving a mountain of old tyres near Stawell that may number the equivalent of as many as nine million passenger car tyres, making it the largest tyre dump in the country.

"It is staggering," said Craig Dunn, chief executive of Green Distillation Technologies. Estimates are difficult to make because the depth of a trench dug through the Horsham Road site is not known, he said.

Mr Dunn said the company would need four to five years to recycle the tyres into carbon, oil and steel.

GDT is in talks with the Environment Protection Authority, as part of the office of Ryan Smith, Minister for Environment and Climate Change. The company is seeking government support with the aim "to provide some sort of solution by the end of this year", Mr Dunn said. Fairfax Media sought comment from the government.

The EPA, itself, will not be providing assistance. "Private companies have environmental issues and they must deal with them," a spokewoman said. "EPA as the regulator is not in the business of funding private commercial enterprise to manage their environmental responsibilities."

Mr Dunn said Australia discards the equivalent of 55 million tyres a year. Many of them end up dumped as collectors are paid to take away the tyres but face minimal if any regulation on how they dispose of them.

The local Northern Grampian shire estimates the Stawell site may hold as many as 1 million truck or bus tyres - alone equal to about five million passenger tyres. The EPA estimates the total number of tyres - of all sizes - to be between 3-6 million.

The shire council says the site may contain as many tyres above the ground as below.

NSW, which requires a permit for storage of more than 5000 tyres, has begun a crackdown on illegal sites around Sydney.

Victoria, which has no limits on tyre numbers, is planning to clamp down on other breaches, such as whether the waste is appropriately stacked or covered, said Katrina Mckenzie, director of strategic relations at Victoria's EPA.

"We’ve got joint inspections with fire services to deal with potentially high-risk sites,” Ms Mckenzie said. The sweep, which will include the Country Fire Authority, the Metropolitan Fire Brigade and other authorities, is "imminent", she said, declining to elaborate.

Sites of interest include ones near Numurkah in the state’s north. Toxic smoke from a fire at one site in May forced nearby residents indoors, with more than 100 firefighters needed to extinguish the blaze. The site is believed to receive as many as 5000 tyres per week but has the capacity to process only about 2000.

"With the bush fire season already started, the site at Stawell along with other major stockpiles in Mildura, Numurkah and Western Melbourne are a major hazard - if one of these sites goes up the entire townships are in jeopardy," said Dave West, national policy director for activists, the Boomerang Alliance.

Dean Beckman, chief executive of recycling company TyreCycle, welcomed government efforts to move on hazardous dumps but said Victoria needed much stricter rules and enforcement if it is to avoid "Stawells all over Victoria".

"There are no regulations whatsoever," Mr Beckman said. "Tyres are coming from all over Australia."

Western Australia, for instance, requires those handling used tyres to build waste-water holding sites so that oil slicks resulting from tyre fires don’t end up in waterways.

Companies should require a licence if they handle more than 2000 tyres, or 20 tonnes of waste. Europe generates more than three million tonnes of tyre waste a year and manages to recycle almost all of it, Mr Beckman said.

Mr West of the Boomerang Alliance said the EPA had been aware of the state's tyre problems "for at least five years and done nothing".

"We understand the Environment Minister has demanded action, it's time for the bureaucracy to stop talking and actually do something," he said, adding that action must extend to tyre retailers.

"Six out of 10 tyre retailers in Victoria are using dodgy operators to dump, burn or smuggle their waste tyres," Mr West said. "Their failure to use legitimate recyclers have caused at least six tyre fires and millions of dollars in property damage."

The EPA said work is underway to support the end of life tyre market. "The market for tyre-derived product is currently weak in Victoria and there needs to be further investigation into future procurement to strengthen the end market," said the EPA spokeswoman.

"The existing regulatory regime is being reviewed to decide the best possible regulatory options for dealing with stockpiling," she said.